Govt tax policy on vehicles’ purchase challenged in IHC3 min read

ISLAMABAD: A senior leader of the Pakistan Tehreek-i-Insaf (PTI) Dr Babar Awan has filed a petition on behalf of an auto dealer in the Islamabad High Court (IHC) against the government’s policy that bars non-filers of income tax returns from purchasing vehicles.

Arguing before Justice Aamer Farooq on behalf of Amir Awan, an authorised dealer of Indus Motor Company Limited, the counsel said the recent amendment to the Finance Act 2018 barring the non-filers from buying cars was a blatant violation of the Constitution.

Dr Awan through the petition requested the IHC to set aside the recent amendment to Section 227-C of the Income Tax Ordinance, calling it “discriminatory” in nature that was “adversely affecting millions of people” across the country.

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The counsel said his client had been lawfully dealing in Corolla, Hilux, Fortuner and other vehicles for the past 18 years in Islamabad. But due to the PTI government’s recent policy, the excise and taxation department refused to register 4,641 vehicles which were purchased even before the promulgation of the law, the petitioner claimed.

According to the petition, the finance division recently amended Section 227-C of the Income Tax Ordinance 2001, through the Finance Act 2018, which was totally discriminatory and ultra vires to the Constitution.

It stated that protection of fundamental rights was guaranteed under Articles 2-A, 4, 9, 10-A, 18, and 25 of the Constitution. “It is pertinent to mention here that under Article 18 of the Constitution, a guarantee is given to the petitioner to have business and trade of car dealing and also to conduct this lawful trade as well as business.”

Subsequently, the petition stated, “The amendment which is brought in Section 227-C of the Finance Act 2018 offends and blatantly violates the provisions of (A) (B) (C) to Article 18 of the Constitution.”

Article 23 provided every citizen the right to acquire, hold and dispose of property, the petition mentioned, adding that “the prohibition on non-filers to acquire such property and for the motor vehicles manufacturers to sell the same to non-filers does not constitute reasonable restrictions in the context of Article 23 or otherwise, including Articles 18 and 24”.

“Furthermore, Section 227-C is also discriminatory in nature,” it said.

According to the petition, it is only in relation to motor vehicles and immovable property above Rs5 million that impediments have been introduced in transaction with or by non-filers. This is a clear violation of Article 25 of the Constitution, as there is no reasonable justification based upon any objective criteria or intelligible differentia so as to introduce such a hindrance only on immovable properties and motor vehicles, the petition claimed.

Dr Awan through the petition argued that as the amendment only targeted one class of business, which was the car industry, it was discriminatory and hence liable to be declared as ultra vires to the Constitution.

“Just because a person is able to purchase a motor vehicle does not necessarily mean that he shall have taxable income in a particular tax year. A motor vehicle is purchasable through instalments or upon yearly savings or by acquiring a loan or as a gift. The data and details of motor vehicles purchasers are very much available with the FBR/taxation authorities and, therefore, the onus is upon the taxation authorities of the FBR to conduct their own investigation,” he argued.

The petition asserted that the finance division, excise and taxation department and FBR had already been charging “a number of indirect taxes on motor vehicles”.

The IHC was requested to set aside the amendment to Section 227-C of the Income Tax Ordinance.

After hearing the arguments, Justice Farooq issued notice to the attorney general and adjourned the hearing for a fortnight.